The US Dollar Stays Bearish Against the Japanese Yen and Canadian Dollar

usdjpy chart

  • The US Dollar Forex rate has continued the weakness evident from December 2017, and in particular since the last rate hike by the FOMC, with further losses against the major G10 currencies in January.
  • This theme of US$ weakness is one that we expect to extend into at least the first part of February (potentially through Q1)
  • The USDJPY sell off in latter January below 110/21 and the psychological/ option level at 110.00 has enhanced bearish pressures from the prior surrender of 112.01, that produced an intermediate-term bearish range break, for a bear trend extension bias into February.
  • USDCAD recovery attempts in January were capped below our key 1.2589 resistance, and the latter January sell off through 1.2361/51 supports, sets risks lower for month-end and into early/mid-February.

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USDJPY Bear trend reinforced

Another new bear move low to 108.26 on Friday, after a rebound effort pushed above resistances at 109.27 and the 109.48/58 area, but failed back from below a strong barrier at 110.04 (from 109.77), for a bearish outside daily pattern to keep risks lower Monday.

The selloff below 112.01 produced an intermediate-term bearish range breakout, setting a bear theme into at least January (whilst below 112.79).

For Today:

  • We see a downside bias through 108.26; break here aims for 108.11 and maybe towards 107.68.
  • But above 109.06 aims back towards 109.77 (which we would look to try to cap). Above aims for 110.04.

Intermediate-term Outlook – Downside Risks:

  • Whilst below 111.48 we see a bear theme with the downside threat to 82, 110.00, 109.53 and potentially closer to 107.29.

What Changes This? Above 111.48 signals a neutral tone, only shifting bullish below 113.39.

Resistance and Support:

109.06 109.77** 110.04** 110.65* 111.22
108.26 108.11 107.68 107.29*** 107.00

4 Hour USDJPY Chart

usdjpy chart


USDCAD Bear trend intact

A notable setback on Friday through minor 1.2341 support, rejecting Thursday’s intraday rebound effort in the wake of another new setback low, after Wednesday’s significant surrender of the 1.2361/51 support area, to keep a still negative tone Monday.

A negative breakout through 1.2620 in latter 2017 shifted the intermediate-term outlook to the downside for January, with risk now fading for a shift back to neutral, seen above 1.2589.

For Today:

  • We see a downside bias through 1.2289; break here quickly aims for the cycle low at 1.2278 and then 1.2252, maybe towards 1.2194.
  • But above 1.2392 aims for 1.2415 and then maybe targets 1.2455, which we would look to try to cap.

 Intermediate-term Outlook – Downside Risks:

  • Whilst below 1.2589 we see a negative tone with the bearish threat to target 1.2429, possibly 1.2194 and 1.2060.

What Changes This? Above 1.2589 signals a neutral tone, only positive above 1.2728.

Resistance and Support:

1.2392 1.2415 1.2455 1.2491** 1.2541
1.2289 1.2278 1.2252* 1.2194** 1.2141

4 Hour USDCAD Chart

 usdcad chart

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